Colorado Heat Pump Rebates & Incentives (2026)
Colorado still has a strong heat pump incentive stack in 2026, even after the federal 25C tax credit ended December 31, 2025. Xcel Energy customers replacing gas heat can earn up to $2,250 per heating ton for cold-climate systems (ground-source earns up to $3,300 per ton) and the state's contractor-claimed heat pump tax credit remains active at $1,000 for air-source systems — both with no income limit. Income-qualified households outside the Front Range can still access HEAR rebates of up to $8,000 until remaining Region 2 funding is fully reserved; Front Range (Region 1) HEAR applications closed in late April. This guide covers all major Colorado heat pump incentives available in 2026, including HEAR, Xcel Energy rebates, the state tax credit, and the new DRCOG Power Ahead program. Here's what's actually available.
Updated July 20, 2026 — verified against official program sources
Rates and program availability may change after this date.
Colorado
Limited / Region-Dependent
Xcel Energy pays $2,250/heating ton for cold-climate heat pumps at its with-bonus rate for customers replacing gas heat ($750 standard), stackable with Colorado's $1,000 state tax credit. Income-qualified HEAR rebates up to $8,000 are closed for the Front Range (Region 1); Region 2 accepts applications until remaining funding is fully reserved. DRCOG's $1,500 Power Ahead rebate (Denver metro, no income limit) is live — preapproval required before work begins. Federal 25C/25D credits expired December 31, 2025.
Sources:
The short version
✓ HEAR rebates (up to $8,000 per heat pump)
Income-qualified households at or below 150% of Area Median Income (AMI). Point-of-sale discount through CEO-registered contractors. Total household cap of $14,000. Region 2 (outside the Front Range) only, until remaining funding is fully reserved.
✓ Xcel Energy rebates (up to $2,250/ton cold-climate ASHP)
$2,250 per heating ton for cold-climate heat pumps at the with-bonus rate (customers with a fuel-burning system, e.g., gas replacement); $750/ton standard. Ground-source earns up to $3,300/ton with the bonus. No income limits, and income-qualified customers can have up to the full cost covered.
✓ Total potential savings: $7,750 to ~$15,750+
$7,750 (above 150% AMI) to $15,750+ (below 80% AMI) for a 3-ton cold-climate system on Xcel. Full electrification packages can reach ~$20,000 total incentives.
✗ Federal 25C/25D tax credits
Ended December 31, 2025. No 2026 installations qualify. The OBBBA terminated both credits seven years early.
⚠ Front Range HEAR is closed; Region 2 is open until funds run out
Income-qualified HEAR funding for the Front Range (Region 1) was fully reserved in late April 2026 — new single-family applications there are closed. The Colorado Energy Office says the rest of the state (Region 2) continues to accept applications until remaining funding is fully reserved — roughly $4.6 million was left at the dashboard's last update. DRCOG's Power Ahead Colorado ($1,500 per cold-climate heat pump, Denver metro, no income limit) is now live per DRCOG's own site and stacks with Xcel and the state credit, but not with HEAR.
Federal tax credits are gone, but IRA rebates survived
The One Big Beautiful Bill Act (signed July 4, 2025) terminated both the Section 25C Energy Efficient Home Improvement Credit and the Section 25D Residential Clean Energy Credit effective December 31, 2025 — seven years early. If you installed a qualifying heat pump by December 31, 2025, you can still claim on your 2025 return (up to $2,000 for 25C air-source; 30% uncapped for 25D geothermal). No new installations in 2026 qualify. Full details on the federal credit expiration.
The IRA's Home Electrification and Appliance Rebates (HEAR) program was not affected by the OBBBA. The federal tax credits ended because they were tax-code provisions, while HEAR was separately appropriated rebate funding administered through states. Colorado's HEAR allocation remains intact. The Home Efficiency Rebates (HER/HOMES) program also survived and is launching in phases.
Colorado's HEAR program: up to $14,000 per household
Colorado's Home Electrification and Appliance Rebates (HEAR) program launched November 13, 2025 for single-family homes and is administered by the Colorado Energy Office (CEO) with Guidehouse as the implementation partner. It offers point-of-sale rebates — the contractor subtracts the rebate from your invoice at installation.
Eligibility requires household income at or below 150% of county Area Median Income (AMI). Within that threshold, two tiers exist:
| Income tier | Coverage | Max heat pump rebate |
|---|---|---|
| Below 80% AMI | 100% of project costs, up to per-measure caps | $8,000 (cold-climate) / $3,000 (standard) |
| 80%–150% AMI | 50% of project costs, up to per-measure caps | $8,000 (cold-climate) / $3,000 (standard) |
Additional HEAR rebate maximums: $1,750 for heat pump water heaters, $4,000 for electrical panel upgrades, $2,500 for wiring, $1,600 for insulation/air sealing, and $840 for electric cooking equipment. The total household cap is $14,000 across all measures.
⚠ Common mistake: assuming HEAR is available at all income levels
HEAR is only for households at or below 150% AMI. If your household income exceeds that threshold, HEAR does not apply to you. Your primary incentives are Xcel Energy rebates, the state tax credit, and — in the Denver metro — the DRCOG Power Ahead rebate (now live per DRCOG's site). Don't delay a project waiting for HEAR if you don't qualify.
HEAR is available for upgrades in a single-family home, apartment, condo, or manufactured/mobile home; the CEO dashboard says small-multifamily rebates "will not be available until later this year," with $13.7 million set aside for them. The CEO says the rebates run for an anticipated four-year period, through 2029 or until funds are spent, whichever occurs first — but demand has far outpaced that schedule. The Colorado Energy Office split single-family funding into two regions, and Region 1 (the Front Range — Denver, Boulder, Larimer, El Paso, and ten other counties) stopped accepting new single-family applications in late April 2026 after funds were fully reserved (proposals submitted after April 27 are denied). Region 2 (all other counties) continues to accept applications until remaining funding is fully reserved — the CEO dashboard showed roughly $4.6 million remaining for Region 2 as of its May 15 update, still the latest posted as of July 20, 2026. Check the CEO HEAR funding dashboard before starting paperwork.
HOMES (Home Efficiency Rebates) — separate program
HER (also called HOMES) targets whole-home efficiency improvements for manufactured/mobile homes and large multifamily buildings 50,000 square feet or larger. The Colorado Energy Office says these rebates will be available in 2026; as of July 20, 2026, CEO had not announced that HER applications were open. It does not apply to site-built single-family homes. HEAR and HER cannot be combined on the same upgrade, but a household can use both programs for different measures.
Colorado state heat pump tax credit
Colorado's own state heat pump tax credit (HB23-1272) remains active and is entirely independent of the expired federal credits. The air-source credit was $1,500 for 2024–2025 installations and stepped down to $1,000 for equipment installed on or after January 1, 2026; the Colorado Energy Office says amounts will decrease again in tax year 2029. No income limits apply, and unlike HEAR, new construction can qualify.
| Equipment type | 2026 credit amount |
|---|---|
| Air-source heat pump | $1,000 |
| Ground-source, water-source, or combined-source | $2,000 |
| Heat pump water heater | $250 |
The contractor claims the credit from the state and must pass at least 33% to the customer as a discount — a minimum of $333 on the $1,000 air-source credit, shown on the invoice as "State of Colorado Heat Pump Discount." Many contractors pass through more than the minimum — ask before signing. All heat pumps must be ENERGY STAR certified, air-source systems must be AHRI-matched, and space-heating heat pumps must be designed to meet at least 80% of the home's annual heating needs.
Xcel Energy heat pump rebates
Xcel Energy is Colorado's largest electric utility and offers the state's most substantial utility-level heat pump rebates. Xcel issued 10,640 heat pump rebates worth $57 million in 2025, and its current 2025–2026 rebate sheet (effective November 16, 2025) carries elevated rates through 2026.
| System type | Rebate | Key requirement |
|---|---|---|
| Cold-climate ASHP (ducted, non-ducted, or mixed) | $2,250/heating ton (with bonus) · $750 standard | COP ≥1.75 at 5°F, 70% of rated heating capacity retained at 5°F; bonus requires a fuel-burning system (e.g., gas replacement) |
| Standard ASHP | $900/cooling ton (with bonus) · $300 standard | 15.2 SEER2, 11.7 EER2, 7.8 HSPF2 |
| Ground-source heat pump | $3,300/heating ton (with bonus) · $1,100 standard | 16 EER2, 3.3 COP |
| Heat pump water heater | $2,250 (with bonus) · $750 standard | ENERGY STAR rated |
The with-bonus rates are available to customers with a fuel-burning heating system; rebates are per heating ton at 5°F for cold-climate and ground-source systems, and per cooling ton at 95°F for standard ASHPs. Xcel also offers a Whole Home Efficiency bonus (25% on all standard rebates when installing three or more measures within two years of enrolling) and a $600 insulation/air sealing bonus for customers who complete qualifying insulation and air sealing before installing a rebate-qualifying heat pump, within two years of each other. Two program rules from Xcel are worth knowing: effective November 16, 2025, bonus rebates are no longer available to homes with existing electric heating systems (e.g., baseboard heat), though those homes still qualify for standard rebates; and installations must be invoiced by December 31, 2026, with rebate applications accepted through September 30, 2027. Non-ducted mini-splits can be self-installed and still qualify — Xcel offers a DIY rebate path — while ducted and ground-source installs go through Xcel's Trade Partner Network. Income-qualified customers may be eligible for additional rebates and services covering up to the full cost of a heat pump and its installation — Xcel's Income-Qualified Home Energy Squad says 50–100% of upgrade costs can be covered, pending eligibility.
Xcel serves customers in eight states, and its rebate menus differ in each — for the full program breakdown, financing, and Minnesota comparison, see our complete Xcel Energy heat pump rebate guide.
Mountain Energy Project
Select high-altitude communities (Breckenridge, Leadville, Silverthorne, and others) have access to dramatically enhanced rebates through Xcel's Mountain Energy Project — up to $7,500/ton for mini-splits and $20,000/ton for ground-source systems. If you live above 7,000 feet, ask your contractor about Mountain Energy Project eligibility.
Other Colorado utilities
Colorado's utility landscape extends well beyond Xcel. If you're not an Xcel customer, check your utility's current offerings:
Colorado Springs Utilities
Up to $2,000 for qualifying cold-climate ASHPs, $750 for standard ASHPs, and $400 for heat pump water heaters. Additional bonuses for income-qualified customers.
Holy Cross Energy
Offers both standard and income-qualified tiers with weatherization bonuses. Serves the Vail Valley, Aspen, and surrounding mountain communities.
Efficiency Works (Fort Collins / Platte River Power Authority)
Heat pump rebates for Fort Collins, Loveland, Longmont, and Estes Park customers through the Efficiency Works program.
United Power
Serves the northern Denver metro area. Offers rebates up to $2,500 for qualifying heat pump installations.
DRCOG Power Ahead Colorado (Denver metro)
DRCOG's Power Ahead Colorado is a $273 million program (a nearly $200 million EPA Climate Pollution Reduction Grant plus roughly $73 million in local government match) serving DRCOG's member governments across nine Denver-metro counties plus parts of Weld County. The program includes nearly $40 million earmarked for heat pump and water heater rebates.
The rebate is $1,500 per ENERGY STAR cold-climate certified heat pump — ducted or ductless. No income limits. DRCOG plans to issue 40,000+ rebates over the five-year program. DRCOG's site now publishes full application details: choose a Power Ahead–approved contractor, and the contractor must submit the project for preapproval before work begins. Retrofits only — new construction is ineligible — in DRCOG-participating municipalities and counties. The initial phase covers cold-climate air-source heat pumps; DRCOG says future phases will add other heat pump types and heat pump water heaters. The rebate program is implemented by Vermont Energy Investment Corporation.
⚠ Power Ahead does not stack with HEAR
Both Power Ahead and HEAR are federally funded. Federal rules prevent stacking two federally funded programs on the same project. Power Ahead does stack with Xcel Energy rebates and the Colorado state tax credit. For income-qualified households, HEAR typically provides more total savings than Power Ahead.
The program also includes no-cost home upgrades for low-income and disadvantaged communities, energy advising services, and workforce training for nearly 5,000 heat pump installers. Check poweraheadcolorado.org for current program details.
How incentives stack in Colorado
Colorado residents can stack HEAR rebates + utility rebates + the state tax credit on a single heat pump installation. The Colorado Energy Office explicitly permits this (for the state tax credit, your contractor must be registered with both programs). Key restrictions: HEAR cannot be combined with other federal grants (including HER/HOMES and Power Ahead) on the same measure, HEAR is only available at or below 150% AMI, and total incentives cannot exceed project cost. Note that HEAR single-family funding for the Front Range (Region 1) was fully reserved in late April 2026 and is closed to new applications there; Region 2 (all other counties) continues to accept applications until remaining funding is fully reserved — so the HEAR scenarios below apply to Region 2 applicants who secure a reservation, and to Front Range projects whose proposals were already reserved.
Above 150% AMI — 3-ton cold-climate ASHP (Xcel customer, gas replacement)
- Xcel Energy rebate ($2,250 × 3 tons): $6,750
- Colorado state heat pump tax credit: $1,000
- Power Ahead Colorado (Denver metro only, preapproval before work begins): $1,500
Realistic maximum: ~$9,250 (Denver metro) or ~$7,750 (outside Denver)
80%–150% AMI — 3-ton cold-climate ASHP (Xcel customer, gas replacement)
- HEAR rebate (50% coverage, up to cap): $8,000
- Xcel Energy rebate ($2,250 × 3 tons): $6,750
- Colorado state heat pump tax credit: $1,000
Realistic maximum: ~$15,750
Below 80% AMI — 3-ton cold-climate ASHP (Xcel customer, gas replacement)
- HEAR rebate (100% coverage, up to cap): $8,000
- Xcel Energy rebate ($2,250 × 3 tons): $6,750
- Colorado state heat pump tax credit: $1,000
Realistic maximum: ~$15,750 (may cover full project cost)
What you'll actually pay
A typical 3-ton cold-climate heat pump installation in Colorado costs $13,200–$21,000. After stacking available incentives, expect to pay approximately $5,450–$13,250 out of pocket above 150% AMI, or as little as $0–$5,250 for income-qualified households below 80% AMI where HEAR covers 100% of costs up to the per-measure cap.
Scenarios assume Xcel gas-to-electric replacement tier. Non-Xcel utility customers will have different rebate amounts. Power Ahead and HEAR cannot be combined on the same project. Xcel Whole Home Efficiency bonus and Mountain Energy Project could increase savings further in qualifying situations.
Income-qualified programs beyond HEAR
Weatherization Assistance Program (WAP)
Free home energy upgrades — including heat pumps on a limited basis — for households earning below 60% of State Median Income. Colorado was the first state to integrate HEAR funding into WAP (October 2024). Automatic qualification for recipients of SNAP, LEAP, TANF, SSI, or Medicaid. Apply at energyoffice.colorado.gov or call 1-866-HEAT-HELP.
Energy Outreach Colorado (CARE program)
Free energy efficiency upgrades including insulation, air sealing, and appliance replacement for income-qualified residents.
LEAP (Low-income Energy Assistance)
Heating cost assistance November through April. While not a heat pump program, LEAP recipients automatically qualify for WAP and CARE services.
✓ Best candidates for Colorado heat pump incentives
Xcel Energy customers replacing gas heat (highest utility rebates), Region 2 households below 150% AMI who secure a HEAR reservation before remaining funds run out, homeowners in Mountain Energy Project communities (dramatically enhanced Xcel rebates), Denver metro residents (Power Ahead $1,500 — preapproval before work begins), and anyone planning multiple upgrades (Whole Home Efficiency bonus).
Cold-climate specs and Colorado installation considerations
Colorado spans ASHRAE climate zones 4B through 7, with most Front Range communities in zone 5B (cool-dry) and mountain areas in 6B or 7 (cold to very cold). Cold-climate heat pumps are strongly recommended statewide and financially incentivized — at Xcel's with-bonus tier, cold-climate systems earn 2.5 times the standard-equipment rate ($2,250 vs. $900 per ton).
| City | ASHRAE zone | Winter design temp | Elevation |
|---|---|---|---|
| Denver | 5B | 1°F | 5,280 ft |
| Colorado Springs | 5B | 2°F | 6,035 ft |
| Fort Collins | 5B | −2°F | 5,003 ft |
| Breckenridge | 7 | −11°F | 9,600 ft |
| Grand Junction | 4B | 8°F | 4,593 ft |
The ENERGY STAR Cold Climate designation requires a COP ≥1.75 at 5°F and heating capacity at 5°F of at least 70% of rated capacity at 47°F. Modern cold-climate models from Mitsubishi, Carrier, Bosch, and Daikin can provide reliable heating down to −13°F to −20°F.
Altitude matters in Colorado. Homes at higher elevations face reduced air density, which affects heat pump performance. Proper sizing through Manual J calculations that account for altitude is essential. Xcel's Mountain Energy Project addresses this with enhanced rebates in select high-altitude communities.
Dual-fuel systems (heat pump plus existing gas furnace backup) are widely recommended for mountain homes and are eligible for both Xcel and HEAR rebates. If you're also considering home battery storage, see our battery guide.
Colorado has no state-level HVAC license — mechanical contractor licensing occurs at the city/county level, with requirements varying between jurisdictions. Building permits are generally required for heat pump installations, typically both mechanical and electrical.
How to get started
Check your income eligibility for HEAR
Use the Colorado Energy Office portal or call 866-336-0016. HEAR is only available at or below 150% AMI, and for new applications, only in Region 2 (outside the Front Range), until remaining funding is fully reserved. CEO says applications are taking longer to review due to high demand, so start immediately if you intend to apply.
Get quotes from CEO-registered contractors
A registered contractor will guide you through HEAR qualification and handle the point-of-sale discount. Get 2–3 quotes. You must use a registered contractor to receive HEAR rebates.
Verify Xcel rebate tier with your contractor
Confirm which equipment tier applies (cold-climate vs. standard) and whether you qualify for the with-bonus rate (fuel-burning system, e.g., gas replacement) or the standard rate. If you're not an Xcel customer, check your utility directly.
Confirm the state tax credit pass-through
Ask your contractor how they'll handle the $1,000 state credit pass-through (invoice discount vs. separate payment). Many contractors pass through more than the required 33% minimum ($333 on the air-source credit).
Schedule installation
Your contractor handles permit applications. Ensure equipment is ENERGY STAR certified, properly sized for your home and altitude, and meets cold-climate specifications if targeting the higher Xcel rebate tier.
What to watch in 2026
HEAR wind-down: Region 2 funds
The Colorado Energy Office planned an anticipated four-year rebate period, through 2029 or until funds are spent — but demand has far outrun that schedule. Region 1 (the Front Range) was fully reserved and stopped taking new single-family applications in late April 2026. CEO had set an August 1, 2026 application cutoff for Region 2, then replaced it: as of July 20, 2026 its page says Region 2 "is accepting applications until remaining available funding is fully reserved." The dashboard showed roughly $4.6 million left at its last posted update. Check the CEO HEAR dashboard for current balances before starting paperwork.
DRCOG Power Ahead rollout
$1,500 per cold-climate heat pump for Denver metro residents. No income limits. Does not stack with HEAR but stacks with Xcel and the state credit. Now live: DRCOG's site publishes full application details — preapproval before work begins, approved contractor required, cold-climate air-source systems only in the initial phase. A key option for above-150% AMI households in the Denver area. DRCOG says future phases will add other heat pump types and heat pump water heaters.
HER housing-type rollout
HEAR already covers single-family homes, apartments, condos, and manufactured/mobile homes; the CEO dashboard says small-multifamily rebates "will not be available until later this year," with $13.7 million reserved. The separate Home Efficiency Rebates (HER) program for manufactured/mobile homes and large multifamily buildings is slated for 2026 but had not opened as of July 20, 2026. Check the CEO website for current eligibility.
Xcel rebate funding cycle
Xcel's rebate sheet notes that funding is limited, first-come first-served, and that rebates are available "until the funding approved by the Public Utility Commission for the rebate program is expended, or the rebate program is discontinued." Amounts and terms can change at any time — confirm current rates with Xcel or your contractor before purchasing.
Frequently asked questions
What heat pump rebates are available in Colorado in 2026?
Colorado has four main incentive layers in 2026. Two are open to everyone with no income limit: Xcel Energy utility rebates (up to $2,250 per ton for cold-climate systems replacing gas heat) and the Colorado state heat pump tax credit ($1,000 for air-source). The third is HEAR (up to $8,000 for income-qualified households at or below 150% AMI) — but HEAR single-family funding for the Front Range (Region 1) closed in late April 2026, and the Colorado Energy Office says the rest of the state (Region 2) continues to accept applications until remaining funding is fully reserved. The fourth, DRCOG’s Power Ahead Colorado ($1,500 per cold-climate heat pump, Denver metro, no income limit), is live — DRCOG’s own site now publishes full application details, and projects must be submitted for preapproval before work begins. The federal 25C tax credit ended December 31, 2025.
Can I stack HEAR with Xcel Energy rebates and the Colorado state tax credit?
Yes. The Colorado Energy Office explicitly permits stacking HEAR rebates with utility rebates and the state heat pump tax credit — for the tax credit, CEO notes your contractor must be registered with both programs. The main restriction is that HEAR cannot be combined with other federal grants or the HER/HOMES program on the same measure, and total incentives cannot exceed the project cost. HEAR also cannot stack with the DRCOG Power Ahead rebate because both are federally funded.
What is the Xcel Energy heat pump rebate in Colorado?
Xcel Energy’s current Colorado rebate sheet (effective November 16, 2025) pays $2,250 per heating ton for cold-climate air-source heat pumps and $900 per cooling ton for standard ASHPs at the with-bonus rate available to customers with a fuel-burning system (e.g., replacing gas heat); the standard rates are $750 and $300 per ton. Ground-source systems earn $3,300 per heating ton with the bonus ($1,100 standard), and heat pump water heaters $2,250 ($750 standard). Xcel also offers a Whole Home Efficiency bonus (25% on standard rebates when installing 3+ measures) and a $600 insulation/air sealing bonus. Note: effective November 16, 2025, bonus rebates are no longer available to homes that already heat with electricity (e.g., baseboard) — those homes still qualify for standard rebates. Installations must be invoiced by December 31, 2026; rebate applications are accepted through September 30, 2027.
Is the Colorado state heat pump tax credit still available?
Yes. Colorado’s state heat pump tax credit (HB23-1272) is independent of the expired federal credits. For 2026, it provides $1,000 for air-source heat pumps, $2,000 for ground-source or water-source systems, and $250 for heat pump water heaters. The credit was $1,500 for air-source installations in 2024–2025 and stepped down to $1,000 for 2026; the Colorado Energy Office says amounts will decrease again in tax year 2029. The credit is claimed by the contractor, who must pass at least 33% through to the customer as a discount — a minimum of $333 on the air-source credit.
Who administers Colorado’s heat pump rebate programs?
The Colorado Energy Office (CEO) administers the HEAR program with Guidehouse as the implementation partner. The state heat pump tax credit is administered through the CEO and the Colorado Department of Revenue. Xcel Energy runs its own utility rebate program. DRCOG manages the Power Ahead Colorado program for the Denver metro area. Each program has its own registration and application process.
Do I need a cold-climate heat pump in Colorado?
Cold-climate heat pumps are strongly recommended for most of Colorado. The state spans ASHRAE climate zones 4B through 7, with most Front Range communities in zone 5B. Cold-climate models are also financially incentivized — at Xcel’s with-bonus tier, cold-climate systems earn 2.5 times the standard-equipment rate ($2,250 vs. $900 per ton). Altitude also affects performance, so proper sizing through Manual J calculations is essential.
Sources
- Colorado HEAR program — Colorado Energy Office
- Colorado HEAR FAQ — Colorado Energy Office
- HEAR Program Dashboard — Colorado Energy Office
- Colorado state heat pump tax credit — Colorado Energy Office
- Power Ahead Colorado (DRCOG) — Rebate Program Overview
- Xcel Energy — Income-Qualified Home Energy Squad
- Xcel Energy heat pumps — residential
- Colorado Springs Utilities — rebates and incentives
- Holy Cross Energy — residential rebates 2026
- Weatherization Assistance Program — Colorado Energy Office
- Colorado Sun — heat pump installations doubled in 2025
Disclaimer: This page covers the main statewide, utility, and IRA heat pump incentives available to Colorado homeowners in 2026. It does not calculate savings, guarantee eligibility, or represent any incentive program. Colorado has additional local and co-op programs that may apply in your area. We verify status regularly but programs can change without notice. Always confirm current amounts and eligibility with the Colorado Energy Office, your utility, and your contractor before making decisions.
See how this state compares → Heat Pump Rebates by State (2026)